Reluctant EU shifts course towards sanctions on Ukraine

* Violent unrest and sanctions a blow to EU strategy (Updates with result of meeting, ministers' Ukraine visit)

By Adrian Croft and Luke Baker

BRUSSELS, Feb 19 (Reuters) - The European Union will on Thursday decide whether to impose financial and travel restrictions on Ukraine after the death of two dozen protesters in Kiev, even though diplomats have doubts about the effectiveness of sanctions.

Having said less than a week ago that the time was not right for sanctions on President Viktor Yanukovich and his government, officials changed tack after a police crackdown in Kiev left at least 26 people dead on Tuesday.

EU ambassadors discussed a series of possible steps including asset freezes and travel bans in talks on Wednesday, but left a decision on whether to impose sanctions to the EU's 28 foreign ministers, who will meet in Brussels on Thursday (from 1400 GMT).

In consultation with the EU, Washington was also considering the use of sanctions against those responsible for the violence in Ukraine, a senior U.S. official said.

"The European Union will respond to the deterioration on the ground, including via targeted measures," European Council President Herman Van Rompuy said in a statement, while continuing to hold out the possibility of trade and political agreement with Ukraine if it meets goals agreed with the EU.

The French, German and Polish foreign ministers will visit Kiev on Thursday and then fly to Brussels to brief other EU foreign ministers on the situation there, diplomats said.

If all member states agree - and diplomats indicate there will be strong support - the EU will target those deemed responsible for the violence, including members of Yanukovich's government, although not the president himself.

Officials said Yanukovich would not immediately be targeted so as not to close off diplomatic channels and to leave something in reserve if the situation deteriorates further.

As well as asset freezes and visa bans, ministers will discuss measures to stop riot gear and other equipment being exported to Ukraine and could consider arms restrictions.

The move marks a near complete U-turn in relations between the European Union and Ukraine. Less than four months ago, Brussels and Kiev were on the brink of signing an historic trade and association agreement that would have given Ukraine preferential access to the EU's single market.

But Yanukovich turned his back on the deal at the last minute, baulking at the demands the deal would have put on his government and favouring closer ties with Russia instead.

Moscow, which regards Ukraine as a province of Russia and culturally its own, has agreed to provide Ukraine with $15 billion in cheap loans and reduce the cost of gas supplies.

DO SANCTIONS WORK?

Yet while the EU appears finally to be moving in unison towards sanctions, diplomats and officials are concerned about the move, aware that such steps have not proved effective in the past, most notably in Belarus, Ukraine's northern neighbour.

Czech Foreign Minister Lubomir Zaoralek acknowledged the shortcomings in an interview with Reuters last week, mentioning Belarus, which the EU has tried to target via sanctions on and off since 1998, including extra measures since 2011.

"You are right that sanctions have limited impact," he said. "But I am absolutely convinced that if there is an escalation of violence, I see no chance to avoid this clear position of the EU, and to use the tools that we have at our disposal."

In a private discussion, a senior EU official who has had contact with Ukraine in recent months accepted that sanctions were almost inevitable, while also accepting that they were unlikely to have an immediate or desired impact.

One difficulty for the EU, aside from whether to target Yanukovich, is what to do about the people around him, especially the wealthy oligarchs such as Dmytro Firtash, a major importer of gas from Russia and someone seen as an ally.

In theory, no sanctions should apply to any supporters unless they are responsible for ordering the violence. But if they are not included in the measures, Yanukovich is likely to be left with room to manoeuvre and financial support.

In recent weeks, as the sanctions debate has bubbled, EU officials have repeatedly pointed to Belarus, where years of restrictions have achieved little result in terms of human rights or democratic reforms by President Alexander Lukashenko.

"What good are sanctions going to do at this stage, with 25 dead already?" said Ivars Godmanis, a former prime minister of Latvia and a now a member of the European Parliament. "We've seen in Belarus how ineffective they can be."

One EU diplomat doubted whether sanctions would be very far-reaching because countries are reluctant to antagonize Russia, where the EU has huge economic interests.

"Frankly I think there will be no more than some rhetoric, maybe some kind of (symbolic) sanctions. Probably too much is at stake as far as economic interests with Russia are concerned," one diplomat said.

CHANGE STRATEGY?

Since Yanukovich rejected the EU deal last November, the EU's strategy has been to keep holding out the offer of an association agreement and to send envoys to Kiev regularly.

That has created the impression of a tug-of-war with Moscow, plunging EU-Russia relations into the deep freeze.

At the same time, the EU has found itself out of step with the United States, which wanted to move earlier with sanctions.

The conundrum for the European Union is that it cannot be seen to throw up its hands and walk away. Many of the protesters in Kiev and other cities have brandished EU flags during their demonstrations, and describe themselves as pro-EU.

To walk away now would be to reject years of careful strategising over how to welcome east European countries of the former Soviet Union into the EU fold, either as member states or as privileged partners, such as Ukraine.

In a sign that the EU has not abandoned those aims, even if officials quietly wonder whether the strategy remains valid, Van Rompuy, the European Council president, said the offer of association made to Ukraine was still on the table.

"The European Union is willing to continue supporting Ukraine in its efforts to reform and modernise the country in order to strengthen democracy and economic welfare," he said. (Reporting by Adrian Croft, Robin Emmott, Martin Santa, Barbara Lewis and Luke Baker; editing by Giles Elgood and Will Waterman)

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